Frame and Investment

Women Are Owning More and More Small Businesses

Owning your own business is often touted as the ultimate coup in the working world. You set your own hours, pursue projects you’re interested in, and maybe work in your pajamas.

About 29% of America’s business owners are women, that’s up from 26% in 1997. The number of women-owned firms has grown 68% since 2007, compared with 47% for all businesses.

The progress for minority women has been particularly swift, with business ownership skyrocketing by 265% since 1997, the report says. And minorities now make up one in three female-owned businesses, up from only one in six less than two decades ago.

Why have minority women had such an apparent breakthrough in the world of entrepreneurship? It’s partially a numbers game – in 1997 minority women represented such a small number of owners – less than one million – that even moderate growth would have likely helped them outpace the growth of the broader field of women-owners. But Jessica Milli, a senior research associate at IWPR, says that the characteristics of minority women who opt to open businesses may also play a role in the runaway growth.

“Women of colour are more likely to be younger when they first found their business,” says Milli. “Given today’s climate – when a lot of purchasing occurs online and social-media usage can really make or break a business this can mean that those businesses might have a competitive advantage.” 

The growing prevalence of female entrepreneurs of all races didn’t happen by accident. Instead, it may be proof that legislation targeted at women and minority small-business owners are having an effect.

Women business owners still face a significant wage gap and continually have smaller amounts of start-up capital than their male peers.

For one, women-owner businesses make only about 25 cents for every dollar their male counterparts earn. That’s a much larger gap than the one that exists in the overall labour market, where the median earnings of women were about 83% of men’s.

Although challenges like access to capital and wage equality persist having more women entrepreneurs may be helpful in and of itself when it comes to boosting the successfulness of female owners. Researchers who studied the effect of peer relationships on female entrepreneurs in India found that women who received business training with a friend were more likely to take out business loans, and more likely to report higher business activity and household income than peers who received training without a peer. And though equality on all fronts is still a long way off, the field of entrepreneurship is “moving toward equality in terms of representation, which is a great thing,” Milli says. “Overall, the picture is optimistic.”

Source: theatlantic.com